The Night-Market Money Tree

One of the government's important justifications for permitting night markets to exist has been that they allow the disadvantaged to earn a living. But is night-market vending really limited to the elderly and the uneducated? Perhaps it's time we took a look at the reality underlying this hoary old stereotype.

More than half of Taiwan's street vendors are snack vendors, frying up hundreds of oyster omelets or stewing up mounds of luwei every day with the simplest of equipment. Some 70,000 people are thought to make their livings from night-market snack stalls islandwide. (left:) Shilin Night Market. (facing page:) Snake Alley Night Market.

The Directorate-General of Budget, Accounting, and Statistics (DGBAS) monitors grassroots economic activities by conducting a Taiwan-wide survey of street vendors every five years. The results of the most recent of these surveys were published in 2008 and offer people outside the industry a glimpse of the actual operations and economic scale of Taiwan's night markets.

The survey found that Taiwan had 309,154 street vendors in 2008, an increase of 18,000 (6%) from 2003's figure. In fact, the ranks of Taiwan's street vendors have swollen by more than 70,000 over the last 20 years, growing steadily regardless of the state of the rest of the economy.

Vendors of beverages and snacks comprise 52.11% of Taiwan's street vendors. Sellers of fresh produce (9.93%) and of clothing, bags, shoes and accessories (9.91%) are the next most common. The preference for hawking food is hardly surprising given the Taiwanese fondness for snacking anywhere and everywhere.

Street vendors situate themselves primarily in traditional markets (40%), residential areas (17.3%), night markets (14.8%), and temple environs (5.2%). That breakdown suggests that Taiwan has on the order of 45,700 night-market vendors.

The 2008 survey also found that 472,700 people (4.5% of Taiwan's employed) depended on street vending for their livelihood, an increase of 28,000 from 2003. Some 3.49% of these were stall owners who employed others; 61.9% were stall owners who did not employ others; 30% were persons helping run a family business; and just 4.36% were workers unrelated to the owner of the stall in which they worked. Given the survey's finding that 14.8% of street vendors operate in night markets, we can estimate that roughly 70,000 people earn their living in night markets.

Small garment and hardware factories depend on night-market vendors to distribute the clothing, toys and other gooads they manufacture.

How long do people typically run a street vending business? Are these businesses stable?

The DGBAS survey shows that vendors operate their business for an average of 8.24 years, which is quite a long time in business terms.

The survey also looked at the educational attainment of vendors. Roughly 38% of those whose formal education ended before high school remained vendors for 11 years or more, possibly because they have fewer alternative means of earning a living.

Among those with a junior college or greater level of education, 61% have gone into street vending in just the last three years and only 11% have been vending for 10 years or more. This suggests that vending may often be something that people with higher levels of academic attainment use to tide themselves over between jobs: once they have the opportunity, they resume "regular" employment.

But when asked about their reasons for going into vending, 30.74% of survey respondents said "work flexibility," 22% said "no other means of support," and 21.8% said "to supplement family income."

In other words, many street vendors enter the field by choice, not because they are compelled to by unemployment. Even among the highly educated, there are many who choose to abandon stable but grueling nine-to-five jobs in favor of the autonomy of street vending.

One man who currently sells Hong-Kong-style rice noodle rolls in Tai-chung's Feng-jia Night Market says he earned just NT$24,000 per month from the Taipei office job he took after graduating from a private university three years ago. By the time he got done paying rent and basic living expenses, he had virtually nothing left. Seeing that his younger sister was earning more than he was from her night-market stall, he decided to move back to his hometown and give it a try.

Night-market workers live life on the swing shift and spend uncounted hours on their feet. An estimated 45,000 vendors operate in Taiwan's night markets. The photos show Taipei's Ningxia Night Market.

How much more than office workers do street vendors earn? That's long been a closely guarded secret.

According to the DGBAS, after deducting the cost of goods sold and other expenses, stalls generate about NT$43,800 per month in income. Given the average of 1.5 persons per stall, that means about NT$29,200 per person per month. But those who run their stalls themselves make an average of NT$34,500 per month. Though these average incomes are higher than those of people just entering the workforce, they are well below 2008's average monthly salary of all employees, which was NT$44,424.

But many scholars believe that the DGBAS survey seriously understates incomes.

In an article on the history of Taiwan's street vendors, Tai Po-fen, a professor in the sociology department of Fu Jen Catholic University, writes that her fieldwork in 1991 showed her that many vendors, especially those selling food, were netting more than NT$100,000 per month. But when she pressed vendors about their incomes, most dodged the question.

Tai writes that vending offers low-education, middle-aged to elderly, married women at a disadvantage in the job market the opportunity to run their own business and an important means of increasing their incomes. But most vendors are actually laborers seeking to change their employment situation.

One young Liuhe Night Market vendor of clothing and change purses who has been hawking goods for two years says his boss runs four stalls in Kaohsiung and Pingtung. While all his company's T-shirts are Korean imports, its embossed manmade-leather- change purses are designed and manufactured in house. The company sells the purses for NT$390 each or NT$1,000 for three. The company, which uses night markets to distribute its goods, employs nearly 30 people, or roughly the same number as the average Taiwanese SME.

Street vending provides seniors and individuals with little formal education with a means of earning supplemental income or even a living. It also helps keep unemployment from spiraling out of control when the economy is in recession.

The "night-market army" represents an important part of Taiwan's labor market. The fact that vendors can earn a living even during recessions helps moderate unemployment.

In a May 2009 editorial, the Economic Daily News wrote that the new government had spent its first year in office doing its utmost to alleviate Taiwan's unemployment problem, but had succeeded in creating only 80,000-some temporary jobs out of the more than NT$10 billion it spent. "An increase in the number of street vendors when the economy is in recession probably isn't the best way to resolve the unemployment problem, but should help alleviate some of the pressure."

In total, Taiwan's street vendors generated NT$508.1 billion in revenues in 2008, accounting for about 4.1% of GDP. Food vendors' revenues totaled NT$406.4 billion, or about 80% of total street-vendor revenues and about 22.6% of Taiwan's annual food sales to the public.

Night-market vendors have also long provided Taiwan's small manufacturers with an efficient means to liquidate inventories and generate revenues.

Yu Shuen-der, an associate research fellow with the Academia Sinica's Institute of Ethnology, says that night markets expanded in conjunction with the explosive growth of Taiwan's small, labor-intensive- manufacturers in the 1960s. When the global oil crisis and economic slump of the mid-1970s struck a double blow to small exporters, who suffered reduced orders and increased merchandise returns, night markets became distribution centers for wholesale and inexpensive goods. In the 1990s, night markets provided outlets for defective export goods and served as a distribution network for innumerable small manufacturers who catered primarily to the domestic market.

Small garment and hardware factories depend on night-market vendors to distribute the clothing, toys and other gooads they manufacture.

Yu's research shows Tai-pei's Wan-hua, Song-shan, and Taipei Station areas, and Ban-qiao's Zhong-xing Street area to be major sources of the garments that street vendors hawk; that dealers in counterfeit watches used to cluster in Wan-hua's Long-shan Temple Market; and that Taipei's and Tainan's satellite cities serve as manufacturing and distribution centers for goods such as toys, hardware, and small appliances.

Tiny factories located in urban alleyways manufacture many of the wholesale goods sold in night markets. These pint-sized operations produce goods too inexpensive to be branded or offer much in the way of features, but to consumers their ever-changing array of new items constitutes an important part of the night-market "treasure hunt."

What this means is that Taiwan's night markets and its small manufacturers are inextricably linked, with night-market vendors functioning as the latter's distribution network.

More than half of Taiwan's street vendors are snack vendors, frying up hundreds of oyster omelets or stewing up mounds of luwei every day with the simplest of equipment. Some 70,000 people are thought to make their livings from night-market snack stalls islandwide. (left:) Shilin Night Market. (facing page:) Snake Alley Night Market.

The labor-intensive garment industry is a case in point. -Shalu Township in Tai-chung County used to be a manufacturing and wholesaling center for women's clothing. In the 1970s, it accounted for 60% of Taiwan's garment market. Small dealers used to come here often to pick up clothing to sell in night markets, reportedly earning several thousand NT dollars per night in the process.

In Taipei, when Wan-hua's garment district was at its peak in the 1970s and early 1980s, it included more than 2,000 small home factories. Some 300 remain today, 90% of which have been forced out of manufacturing and into wholesaling by high labor costs.

Dong-feng Menswear Wholesaling, located on Wan-hua's Xi-yuan West Road, deals primarily in men's athletic shirts. Its owner, Hong Zhuan-xiong, who is also the managing supervisor of the Wan-hua Clothing and Accessories Dealers' Development Association, says that 30 years ago, his family's factory employed six to seven middle-aged people who had been working there since their teens. But garment manufacturing is hard on the eyes, and young people have become reluctant to learn the trade. As the company's older workers retired, it was compelled to transition into wholesaling. Nowadays, its customers are largely vendors from nearby urban markets, including the Guang-zhou Street, Xi-chang Street, and Shi-lin Night Markets.

People say street vendors drive Mercedes Benzes, but how much they really earn is a trade secret.

Once an enormously profitable world leader, Taiwan's garment industry ignored endemic problems, failed to upgrade its technology and design capabilities, and failed to build its own brands. It also had a strong penchant for plagiarism. When the business environment changed, local companies fell like dominos.

As Taiwanese began traveling abroad and became more aware of the larger world in the 1980s, manufacturers from Korea and Hong Kong took advantage of the opportunity to begin exporting their own low-cost fashion-conscious clothing and accessories to Taiwan. Major designer labels also began marketing elegant and expensive designer clothing to Taiwanese women. Meanwhile, a combination of factors that included the migration of mid- and upstream materials suppliers to mainland China, rising labor costs, and a dearth of fresh blood in the design sector, resulted in Taiwanese garment makers exiting the market.

Yu says that a decade ago the goods sold in Taiwanese stores differed greatly from those sold in night markets in terms of the quality of the work, the design, and the quality of the fabric. These days, both stores and night markets deal in mainland Chinese and Korean products. The only difference is whether the clothes have a brand label. But even brand-name clothing falls sharply in price once its season has passed. Seasonal clothing that isn't well received by consumers, has gone out of fashion, or has blemishes typically makes its way back into the market via night markets. If Taiwan's night markets didn't exist, tens of thousands of small Taiwanese manufacturers and wholesalers would face immediate extinction. Our night markets' unique role in the economy is especially obvious during economic downturns.

Many people believe that night-market vending is a low-cost, high-profit en-deavor that doesn't involve taxes or rent. Are they right?

Ministry of Finance regulations state that if a street vendor operates a business at a fixed location, the vendor must pay a 1% business tax. The amount of the tax depends on factors including the type of business, the square footage of the operation, and the location, which are used to create a revenue assessment. The highest- revenue tier is set at NT$266,700 per month, yielding a tax of NT$2,667 per month. But in recent months a number of snack stalls have caught the eye of mainland tourists and seen their businesses explode in popularity, leading to questioning of the National Tax Administration's assessments. For example, it has been pointed out that the Zheng Papaya Milkshake shop in Kao-hsiung's -Liuhe Night Market has as many as 12 employees working at a time and sells an average of 700 milkshakes a day (at NT$50 each). Such snack stalls are far exceeding their assessment levels. Is the NTA checking up on them?

The Taipei office of the NTA says that it has to verify these kinds of claims. To do so, it usually sends an investigator to look in on the business at different times of day. When it finds a snack stand that really is generating business beyond its assessment level, it levies a supplemental tax on the excess. The Taipei office has, for example, made upwards revisions to the assessment on a certain fried chicken cutlet stand in Shi-lin Night Market. But the NTA notes that a number of factors affect the amount of business at these kinds of small stands, including weather, the economy, and the presence of new competitors nearby. Given that their sales fluctuate widely, the NTA says it tends to be "conservative" in its assessments.

The notion that street vendors don't pay rent is also inaccurate. Yu explains that every night market has its own rents. For example, spots on the arcade in front of shops on Shi-lin's Da-dong East Road and Wen-lin Road go for NT$15-40,000 per month and are hard to come by even at those kinds of prices.

Entrepreneurs seeking one of the limited number of spaces in a well known night market need good connections, as well as the ability to afford high rents.

A vendor in Tai-chung's Feng-jia Night Market provides a case in point. This vendor started out by renting a 180-square-foot storefront for NT$60,000 per month nine years ago, but has since got to know the people in the market much better. A year ago, he was able to persuade a street vendor in the market to move over enough for him to squeeze in a food truck, a privilege for which he pays NT$30,000 per month-but the truck does better business than the shop. Now he and his wife each handle one of their two spots, one in the shop, the other on the street.

Market permits are another limiting factor. Though the government permits vendors to pass their licenses on to their immediate family, they are not permitted to transfer them to others. Of course, as everyone who makes their living in night markets knows, it doesn't work that way in practice.

The rights to a licensed snack stall in Shi-lin Night Market can command as much as NT$6 million. Those to a stall in Kee-lung's Miao-kou Night Market go for about NT$3 million.

While the "illegality" of the private transfers of stalls means that the name on the license remains the same, many people are quite willing to lay out large sums of money to operate under a false name and hope that nothing goes wrong.

But in recent years members of the public have begun filing complaints about the illegal transfer of snack stalls. As a result, some 30 stalls in a well known night market in the south lost their licenses. Clearly, many people covet night-market spaces and want one for themselves.

Doing business in a night market is no different from doing it anywhere else: some people make a mint; others lose their shirts. A popular night-market tale has snack-stall operators moving on to become mainstream entrepreneurs. Wan-hua's Tai-nan Dan-zai Noodles and the island-wide Formosa Chang restaurant chain are well known examples of the tale playing out in the real world.

The book Vendor Entrepreneur describes how Formosa Chang grew from a stall in Tai-pei's Ning-xia Night Market into a national chain. Chang Yung-chang, the company's current chairman, began helping his father mind their snack stall at the age of six, serving food and clearing up tables after school. Hearing neighbors yell at his father for waking them up as he tiptoed home with his cart in the wee hours of the morning, he resolved to improve his family's financial circumstances.

For more than a decade, he watched his parents live their lives on a vampire's scheduling, getting up at 12:30 in the afternoon to prep food, setting up their stall at 5 p.m., and working in it until two the next morning. After completing his military service, Chang suggested to his father that spending 12 hours a day to do eight hours of business wasn't efficient, and told his father that he was going into a different line of work unless the elder Chang moved their business into a proper storefront.

Though his father chided him for being a "beggar with ambitions," he reluctantly agreed. Fortunately, they were able to acquire the shop behind their stall for NT$40,000 per month in 1979 when the building supply store that had occupied it relocated. Once in the storefront, they began serving lunches that drew in business from residents and office workers in the neighborhood. When sales continued to improve, they began serving food round the clock.

In his efforts to transform stewed minced pork over rice into a signature Taiwanese snack, Chang studied the operations of fast-food leader McDonald's closely. He came away deeply impressed by the industry giant's ability to run eateries that didn't have a greasy feel. In 1983, he became one of the first Taiwanese snack-shop owners to install air-conditioning and receive ISO certification, ensuring that his customers would be confident of the safety of his food and comfortable while eating it. He began offering franchises in 1993 and now has 39 restaurants throughout Taiwan that together generate NT$600 million in annual revenues.

Night markets have long been regarded as part of the informal economy, both for their small size and their slightly shady reputation. But today's night markets offer a great deal to the formal economy: they represent a safety net for those who have lost their jobs; provide distribution to innumerable small businesses; and function as a training ground for Taiwan's entrepreneurs. It's time to see our night markets in a positive light!